long term care

have been doing ltc for some time now and was originally a career agent with met, so i am familiar with their product. but am curious as to which carriers you guys use and are comfortable with. i am also wondering if anyone has info on thrivent (other than the fact that they are not a huge player) and NML (other than they are expensive). i have been looking pretty much exclusively at Met and Hancock due to history of claims paying ability and rate increases, or lack there of. my general agency has been pushing mutual of omaha, but i am shying away from the new kid on the block with low prices. thanks.

Wall Street Journal wrote an article on LTC providors a couple of years ago. The conclusion they came to was that there are three that are top of the heap. In my order of preference they are Hancock, Genworth, and Met. I'm not a big fan of either new providors or small ones. This arena is one you don't really need to be playing in if you don't have the finances to take the risks. Thrivent is popular because of the connection with the Lutherans so I see them a lot. They have a history of cutting benefits or raising premiums to keep your benefits. Low prices, like you mentioned with Mutual of Omaha, don't always mean good things. Unless they plan on doing a TON of biz, they will have to come back to your clients some day and reprice. It's an expensive game to play and those companies won't survive if they price it wrong. Like Thrivent did.

Genworth has a single premium product they just added, at least they just added it within the Jones system. So you have a couple of options with them. If you like that strategy you can also look at Lincoln's Moneyguard product.

Northwestern Mutual scares me a little bit simply because they set up their LTCi as a separate company. I think NML is an excellent company, but my fear would be that they would jettison the whole thing. Of course, it doesn't matter since I can't sell their product.

You have to strike Hancock from your list of companies without rate increases.

The companies that I think are the least likely to have rate increases are New York Life and MassMutual, but since NYL can't be sold by brokers, scratch NYL. MM is the company that I firmly believe is the least likely to have rate increases for existing clients.

That's not so much an outright plug for MM as it is simply a suggestion that if all else is fairly equal, they deserve serious attention.

Unlike disability income insurance, the definition of what makes one "chronically ill" is essentially the same for each tax qualified contract. Most of the differences are relatively minor in the grand scheme of things. There are many good carriers...Genworth, Hancock, Met, MM, etc. Which is the best? It depends on the specifics of the situation.

A 70 year single guy in great health who wants a lifetime benefit may be best at Met.
A 70 year married guy in great health who wants a 3 year benefit may be best at John Hancock.
A 70 year married guy in good health and a 60 year old wife in good health may be best at MM
A 70 year unhealthy guy may be best with Prudential.
A 72 year wealthy and healthy guy who wants lifetime benefits may be better off buyin a GUL policy and forgoing the LTCi.

Above scenarios are made up. I don't know who is the best in each scenario. Unfortunately, LTCi really needs to be spreadsheeted to determine what is best for the client. Spreadsheet for yourself, not for the client.

Prediction: We won't see significant future price increases for new clients. Instead, we will see things being done to lower the insurance companies' risk. We've already seen it in the last round of price increases. Many increases were minor, but they were very large for lifetime benefits. The companies don't want to sell lifetime benefits.

thanks guys. i know hancock raised rates. met jacked prices when they introduced the new series i know. nml scares me a bit too. great at what they do "core," but their track record with di is not exactly stellar either. i realize it does not matter much as we cannot sell them anyway. only possible "thing" i see as an advantage for met is their "unforeseen treatments" clause. not sure how it will ever play out, but who knows. i was basically looking for reassurance that met/hancock/(and now genworth) were in the ballpark of what others are using. i am unaware of much regarding mass mutual but will def check them out. thanks.

anonymous wrote:A 72 year wealthy and healthy guy who wants lifetime benefits may be better off buyin a GUL policy and forgoing the LTCi.
I understand that you're talking about a hypothetical scenario, but is there any chance you'd mind elaborating on this one a little bit?Honestly I don't understand why or how it would be better off for them to buy GUL and forgo LTCi if they are looking for lifetime benefits...but I'm willing to learn.

I understand that you're talking about a hypothetical scenario, but is there any chance you'd mind elaborating on this one a little bit?Honestly I don't understand why or how it would be better off for them to buy GUL and forgo LTCi if they are looking for lifetime benefits...but I'm willing to learn.

No problem. The answer to this question is part of the reason why LTCi carriers can't keep raising their rates and will find ways to design policies that don't pay out quite as much.

People buy LTCi for two reasons. 1) They can't afford the cost of long term care or 2) They can afford the cost of long term care, but they'd rather pay pennies on the dollars for an insurance policy. They are trying to protect their assets.

Buying life insurance instead of LTCi is for people in the second category. (These are completely made up numbers in my example.) Ex.

Choice #1: Buy LTCi policy for $5000/year. If care is needed, the policy will pay for care. If care is not needed, $5000 was spent with no benefit received.

Choice #2: Buy GUL policy for $5000/year. If care is needed, pay out of pocket. This out of pocket expense will get "reimbursed" at death. If care is not needed, the policy will stay pay at death.

In one way, it's like term insurance vs. whole life, but without the giant price discrepancy. Would you rather insure against a possibility (the need for long term care and the unknown of how long care would be needed) or would you rather insure against a certainty (death)?

I can't stress enough that this only works for someone who has the resources to pay for care out of pocket.

Lifetime benefits doesn't have all that much to do with what I'm talking about except for the fact that the insurance companies have really jacked up the price for lifetime benefits, so we are talking about premiums that are much more in the ball park with life insurance.

Also, I only like GUL policies at older ages. In general, I like using term insurance and whole life insurance for non-old people.

That shouldn't be a concern. They've all done that. That's the fair way to do it. It's the companies who have raised rates on existing clients that should trouble us. It feels too much like a bait and switch to me. This is one of the reasons that if everything in the same ballpark, I would choose a MassMutual policy over a Genworth or a Hancock policy. I simply don't see a big Mutual company raising rates on existing clients unless it is a complete necessity. Stock companies, on the other hand, have a responsibility to do whatever is in the best interest of the stock holders.

Don't get me wrong. I sell plenty of policies from stock companies, but I tell all of my clients with these policies that they should EXPECT price increases in the future.

John Hancock is the company to use when your client is not healthy. They are much more lienient, especially w/diabetes, then Genworth. John Hancock also has substandard classifications while most companies have preferred/standard.

LTC was never priced accurately. They began by using DI morbidity tables. (Don't quote me on actual words here, but the concept).

However, there are only a couple of things insurers can do:
1) Raise rates on existing policy holders.

If insurers do that, then the GOOD risks will simply apply for a new policy with another insurance company. Is that a good thing? Well, who's left with their old policies? Those who CAN'T get a new policy. The company has just done reverse anti-selection to themselves. They've just retained those who are the BAD risks to increase their experience of LTC claims. (That's not good.)

2) Increase rates on every new "series" they come out with, and come out with new series quicker and decrease benefits.

Is this a good thing? I think so. Why? Because our smart clients will buy now to lock in their lower rates and higher benefits. Those who remain who didn't buy will be the "stupid" clients. Why? Because they will pay MUCH more for LESS benefit and THEY will essentially be paying for the current claims with their policy premiums for the smart people who paid much less for their higher benefit policies.

Another theory of his is that nursing home insurance will become mandatory - just like car insurance. How will they "enforce" it? Via Medicare qualification. The government doesn't want to (and really can't) pay for everyone's nursing home care, so they'll make it a requirement for seniors to get medicare.

Seniors will then ask - how much is nursing home insurance? If you haven't run a quote on a 65-year old, do it. Then run a quote on a 55-year old and a 45 year old. Ask yourself: "At what age does the purchase of long-term care make the most sense for your client? What benefits do you want your clients to have from their long-term care policy?"

Because when the government mandates coverage, rates will be level with the insurers left in the LTC game, benefits will be lower and everyone competing on 'cost'. If you know anything about selling anything of quality, you know that "cost" rarely means much compared to peace of mind.

There are some problems with those theories.
The adverse selection theory doesn't quite hold true. If it did, companies wouldn't raise rates on existing clients, yet many have done so and more will follow suit. There is certainly some adverse selection, but not as much as one would think. Although it is true, that with a price increase, people who are pretty unhealthy would keep their policy, it is not true that the good risks will go and get coverage with another company. Here's why:
Joe bought a $160 day policy from XYZ company with 5% compound inflation in 1998. He was 50 years old. There have been 3 price increases since then for new policy holders. XYZ has finally increased the price on old policies by 30%. In order for him to get a new policy with the same benefit with a new company, he would be paying the rates of a 60 year old for a $261 day benefit. The rate would probably me more than 3x what he was previously paid.
I think something may have gotten lost in the Medicare theory because it doesn't quite make sense. Nursing home insurance is not long term care insurance. It's not a big percentage of people who end up in nursing homes and when they do, the average stay isn't terribly long.

As it is, Medicare does not pay for long term care, so there is no reason to tie these things together. Besides, it would be awfully tough to make LTCi mandatory since most people can't afford it and many others can't get it. If it was mandatory, what would happen is that it would all be guarateed issue which would cause prices to skyrocket for comparable benefits and our tax dollars would be paying for most of it.

Anyway, what does make sense and what is happening is to tie LTCi in with Medicaid. Medicaid pays for long term care. Many states are approving partnership policies. Partnership policies encourage people to buy LTCi by protecting assets from Medicaid. Different states have different rules but in general, they work in the following manner. Let's say that you live in the state of ZA and purchase a policy with a 3 year benefit for $200 day. 200 x 3 x 365= $219,000. The state of ZA allows someone to keep $10,000 for Medicaid qualification purposes. The person who purchases this policy can keep $219,000. The Government is using a carrot instead of a stick.

anonymous wrote:Many states are approving partnership policies. Partnership policies encourage people to buy LTCi by protecting assets from Medicaid. Different states have different rules but in general, they work in the following manner. Let's say that you live in the state of ZA and purchase a policy with a 3 year benefit for $200 day. 200 x 3 x 365= $219,000. The state of ZA allows someone to keep $10,000 for Medicaid qualification purposes. The person who purchases this policy can keep $219,000. The Government is using a carrot instead of a stick.To qualify for the partnership feature, the LTCi policy must have certain (age-dependent) inflation-protection riders.

To qualify for the partnership feature, the LTCi policy must have certain (age-dependent) inflation-protection riders.

I believe, but am not certain, that this depends on the particular state.

Also, depending on how a state sets up its program can determine what type of policy should be purchased. For example, as agents, we may argue about whether a short and fat policy is better than a long skinny one. ($250 a day for 3 years vs. $125 day lifetime) It is possible in this example, in one state for the fat policy to be better and in another state for the skinny policy to be better.

crap hit the fan at met 2-3 weeks ago. in force policies going up 17-18%, no longer offering lifetime benefit. holy cow were some met guys/gals going off on the conference call when they announced this.

LTC is sensitive to sell - you can really help/hurt an elder person and their family depending on the product. I can't imagine having a middle class former gov't employee on a pension and having his rates raise 20% one year when his pension doesn't go up more than 2.5%. Or he goes to make a claim and the fine print has an exclusion or is much to strict on what it takes to get a claim - what a nightmare.

If you look at the last 15 years, the top 10 LTC companies have changed because most try to enter the market below cost and then raise their prices - but it ended up hurting them and they sold their business.

One thing to consider - is a company raising their rates just because - or is it because of a new addition they are adding to the policies (there have been 10 "additions" to LTC in the last few years).

I have to plug NMFN because I work there - we have never raised our rates (it costs the same for a 68 year old today as it did in the 90s). Granted - you are correct in that we are a little above average on our cost. Also - no increases for any of the additions either (and we started paying a dividend on our policies after the first 3 years which is making them much more competitive).

Also - to comment on what anonymous said about their LTC company being a seperate company - NMFN is split up into a bunch of companies (life, DI, LTC, brokerage, mutual funds, estate planning, employee benefits). Some of them are specifically called Northwestern Mutual ___________, others have different names (like Strategic Employee Benefits).

I was told by my boss - if you need to write outside to keep a life or DI case - fine - but don't sell anything else for LTC - it could come back to bite me later on... I realize this is his own personal opinion but he also understands the importance of quality product when dealing with this type of situation. Like everyone else said though - you can't broker NMFN. There are other great companies with quality products - I think everyone else had good suggestions above...

I would look at financial ratings of the company, price increases, the wording of their policies (some are more strict than others for making claims - much harder for the client to utilize), and how long they have been selling it.

also - i think it is a mistake to not sell the lifetime benefit for LTC. Insurance is paying to protect against a risk - you may as well pay a tiny bit more and have the bigest risk covered (if you know anyone in their 40s/50s/60s who got MS or paralyzed due to stroke, would you want to tell them they were paying $150 a month and only have 5 years of coverage, or be assured that they have coverage for a lifetime with no max benefit (for slighly more)... I know that is an extreme case - and the average care needed is only 2 years - but it isn't worth the risk... My grandpa spent 10 years in a nursing home and spent most of the money from his estate - money that he had worked into his 70s to save for his family - so I am quite passionate about LTC.

Silverstang, don't take this too personally but your posts sound like a combination of talking out of your ass and drinking too much Northwestern Mutual Kool-Aid

"If you look at the last 15 years, the top 10 LTC companies have changed because most try to enter the market below cost and then raise their prices - but it ended up hurting them and they sold their business."
Name one company that has entered the LTCi business priced under the competition. I don't know of any. The industry as a whole has been underpriced, but it's a terrible business decision to plan on price increases. The policies have been underpriced primarily because the industry screwed up with their lapse ratio expectations and their investments have not done as well as expected.

"I have to plug NMFN because I work there - we have never raised our rates (it costs the same for a 68 year old today as it did in the 90s)."
That's not true. The company has not raised rates on existing clients, but they have had price increases. A 68 year old today would not be paying the same rate as a 68 year old who purchased a policy in 1998, nor would it be the same policy. Also, the company really wasn't in the business in the 90's. They didn't start selling until 1998 and the number of policies sold in the 90's was probably less than 1000. They changed their policy series in 2002.

"Also - to comment on what anonymous said about their LTC company being a seperate company - NMFN is split up into a bunch of companies (life, DI, LTC, brokerage, mutual funds, estate planning, employee benefits). Some of them are specifically called Northwestern Mutual ___________, others have different names (like Strategic Employee Benefits)."
These are not all separate companies. They are primarily an insurance company. Life and DI are not separate companies. It is one company and they sell life, DI, and annuities. LTCi is a separate company.

"I was told by my boss - if you need to write outside to keep a life or DI case - fine - but don't sell anything else for LTC - it could come back to bite me later on... "

What's going to bite you is selling Northwestern Mutual for all clients who need LTCi. They are a good company and they will sometimes be the best for your client. Sometimes they won't.

"also - i think it is a mistake to not sell the lifetime benefit for LTC. Insurance is paying to protect against a risk - you may as well pay a tiny bit more and have the bigest risk covered (if you know anyone in their 40s/50s/60s who got MS or paralyzed due to stroke, would you want to tell them they were paying $150 a month and only have 5 years of coverage, or be assured that they have coverage for a lifetime with no max benefit (for slighly more)... I know that is an extreme case - and the average care needed is only 2 years - but it isn't worth the risk... My grandpa spent 10 years in a nursing home and spent most of the money from his estate - money that he had worked into his 70s to save for his family - so I am quite passionate about LTC. "
It depends. I used to sell mostly lifetime benefits. Now, in many cases, the insurance companies have priced the lifetime benefits in such a way to make life insurance a better option. If the price of lifetime benefits was slightly more, that would be one thing, but the price difference usually isn't slight. The best company is case specific. The best mix of benefits is case specific. If it is a partnership state, it may not make much sense to buy lifetime. It may be better to buy a short and fat policy.

Most of the insurance (life and DI) falls under Northwestern Mutual Life Insurance while LTC is seperate (along with employee benefits and the brokerage).

I did go to work and try to look up info supporting what I said - I can confirm that NMFN has "not raised rates on new or exisiting business." (if you are from nmfn the article number is 60-3035 (1202).

also - it sounds like we are saying the same thing about companies coming in underpriced - most did and the ones that were selling a lot in the 90s are gone (for the most part...). NMFN has always been expensive (but at least pays a dividend back to offset part).

Again - while I am partial for obvious reasons - I am not saying NMFN is the best/only company to go with - i haven't done enough research in the LTC field to know (which is why I read this post to begin with). I just wanted to post what I knew (or thought i knew) to be true in my brief experience.

The big mutuals (NMFN, NYL, MM) did something very right when it came to long term care insurance. They didn't sell it until the end of the 1990's/early 2000's. They looked at the pricing and realized that it could not be sold profitably. The companies who started in the LTCi business before that point are all either out of the business or have raised rates on existing clients or will be raising rates on existing clients.

The claim, "not raised rates on new or exisiting business" doesn't have that much meaning because the other big mutuals
When they did get into the business, they thought that it could be done profitably. However, it's starting to look like this may not be a business that can be done profitably. Time will tell.

You certainly won't have to apologize for selling Northwestern Long Term Care. They are much less likely than some other carriers to raise rates. However, just as an example, if Northwestern offers someone standard rates and a comparable company like MassMutual offers ultra preferred rates, its tough to see how that client would be best served with Northwestern.

I think that Northwestern is smart with their pricing. They intentionally have it overpriced. They plan on paying dividends. If it turns out that they are not overpriced, they don't have to raise rates because lowering the dividend serves the same purpose. (silverstang, from a sales perspective, you don't want to talk to your clients about the dividend. You don't want them unhappy if one doesn't get paid.)

"not raised rates on new or exisiting business."

None of the big mutuals selling LTCi have raised rates on existing business. "Not raising rates on new business" doesn't have any meaning. The reason is that when a company wants to raise rates on new business, they make changes in the policy. This new policy is not the same product. It gets introduced with a new pricing structure. Since the policy is different, it's not a price increase because it's not the same thing. Often, when this happens, the policy gets cheaper and more expensive at the same time depending on the particulars.

By clicking below, I acknowledge and agree to Penton's Terms of Service
and to Penton's use of my contact information to communicate with me about Penton's or its third-party
partners' products, services, events and research opportunities. Penton's use of the information I
provide will be consistent with Penton's Privacy Policy.

I acknowledge and agree to Penton's Terms of Service and to Penton's
use of my contact information to communicate with me about offerings by
Penton, its brands, affiliates and/or third-party partners, consistent
with Penton's Privacy Policy.*

Webinars and White Papers

What does it take to lead a high performing team? Are you seeing the kind of ROI from your next gen advisors that you need to? Do you know what you need to do to ramp up next gen performance quickly and efficiently? There are ways to support the efforts of your next gen team to be more productive in less time, but you have to know the secrets to leading a high performance team....More

With the Fed poised to hike rates for the first time since 2006, many investors are concerned about the risks to their bond holdings. But rising rates also have positive aspects for some investors....More

These articles from the Investments & Wealth Monitor focus on the challenges of longevity and how families can prepare, maximizing wealth over increasing life expectancies with social security, and long-term care and asset protection....More

Small-cap growth stocks have turned in strong performances year to date, but various macroeconomic events and cross currents exist in today's market environment. Learn what's behind the gains and where the opportunities for small-cap stocks can be found going forward....More